If you’re not familiar with the term, B2B payments are made between two businesses. The payments could be against the services or the products that one merchant sold to the other.
It is needless to say that quick and easy payments are rewarding for both parties involved in a B2B transaction.
For instance, it can help maintain a regular cash flow for any business. Besides, it can also help maintain a healthy relationship between both parties.
Bills and tokens have always been the primary choice for traders to make payments. But bills or tokens may not seem appropriate for making international payments. Not every country accepts the same currency, and not every currency is equal.
So, is there any better way to do it?
The Better and Easy Methods
Today, the payment options between businesses are endless. Buyers can use their mobile wallets or their Internet banking facilities to wire money from anywhere in the world.
The digital transformation of payments has offered a more efficient way to send or receive money.
Virtual Payments
The best of all the modern payment methods is virtual transfers. As the name suggests, there is no physical delivery or acceptance of any form of money. But only a number in the bank account against the balance sheet.
Notably, there are plenty of virtual payment methods available. Besides, they can also be made for one-time use or can be programmed to limit expenses.
So far, virtual methods have proven their safety and security while making payments. And also are better equipped with money management tools.
ACH Transfers
Abbreviated for Automated Clearance House transfers, payees can also choose to customise their payment time and date. The payee’s banking institution primarily processes this method.
It is noteworthy that ACH transfers are initiated instantly but can take up to 3 days to process. Thus, it is advised to use this method only when there are delivery delays, but a guarantee is needed.
E-cheques are one of the most commonly known ACH transfers.
Letter of Credit
Since there is a need for a guarantee in some B2B payments, there is one more suitable payment method. A letter of credit is an electronic mechanism that allows the buyer to place the full payment as a guarantee in exchange for goods and services.
The method is, although, a little complicated. For instance, the buyer would need to authorize a payment from their bank to the seller’s bank. The payment would be released when the goods or services are delivered.
The whole process could take days before the payment is confirmed and logged into the register. As a business owner, you would not want to wait for or delay your payments.
This could be bad for your business image and can discourage your partners from trading with you. Choosing a payment method that is fast and reliable, on the other hand, can encourage more customers to deal with you. And improve your business’s overall profitability in the long run.